Vaughn Palmer: Despite bumpy ride, Hydro boss states Site C's on track, under control

VICTORIA — B.C. Hydro president Chris O’Riley cut first to the bad news Wednesday when releasing the latest progress report on the Site C project.

“We acknowledge two areas of concern: schedule and safety,” he wrote in the covering letter to the B.C. Utilities Commission on the update for the first three months of the year. “For these reasons we classified the overall health of the project for this quarter as ‘red,’ or having serious concerns.”

On the scheduling front, Hydro began the year embroiled in a dispute over the main civil works contract. The largest contract for the project (excavation, bank stabilization, river diversion, construction of the earth-fill dam itself) it was also the most troubled.

The work went badly sideways a year ago when giant tension cracks opened on the north bank, forcing major holdups in construction and postponement by one year of plans to divert the river itself.

The contractor, Peace River Hydro Partners, a consortium led by Spain’s Acciona Infrastructure, was seeking a major top-up in funding to complete construction.

No less a cause of the code red rating were serious developments on the safety front. In the first three months of the year the construction site had already recorded “two lost-time injuries, six medical attention treatment injuries, and five near-misses that could have potentially caused a serious injury or fatality.”

Four of the most serious incidents involved work on the main civil works contract. One problem forced a 24-day shutdown of work on one of the two tunnels for diverting the river. WorkSafe B.C. had issued six inspection reports and written up 15 orders against the contractor.

All this was a prelude to what the Hydro president saw as the good news regarding the project, because the problems that emerged in the first quarter had been addressed.

“We have implemented a senior-level safety steering committee with all prime contractors to address shared safety issues and opportunities,” he advised the commission. “We’re also hiring a permanent senior field safety manager and are regularly holding on-site safety conferences to improve the project’s safety performance and culture.”

He was also able to report resolution of the scheduling concerns regarding the main contract: “Last month, we reached a memorandum of understanding with the main civil works contractor.”

Terms of the June 7 agreement included assurances there will be no further delays in the current target date of September 2020 for diverting the river and “numerous incentive payments to the contractor if and when they meet critical project milestones.”

“The total potential cost of the agreement over the life of the project is $325 million,” the Hydro president further advised the commission.

As of the first quarter of the year, the main civil works contract is budgeted at $1.818 billion. Presuming the consortium is able to hit all its marks, the incentive payments could push the cost to $2.143 billion.

Not will that necessarily be the final upward revision.

When the B.C. Liberals greenlighted Site C in December 2014, the main civil works were budgeted at $1.559 billion. In less than four years, the projected tab has grown by $585 million or almost 40 per cent.

Note, too, that it took $325 million worth of incentives just to get the work to this point. The river diversion is still two years away. Figure another two years to complete the earth works dam.

Nor is that the end of the risk factors acknowledged in the quarterly report. Other sources of uncertainty include First Nations litigation, reworking the plan to re-route a provincial highway around the site, environmental approval of changes in the design of the spillway and generating station, and clearing rights of way for the transmission lines through the territory of Indigenous peoples.

Even so, O’Riley in his covering letter insisted things are back on track.

The additional cost of the agreement with the main civil works contractor will be covered out of the contingency budget for the project. The overall budget for the project remains unchanged at $10.7 billion.

“B.C. Hydro is in a stronger position to deliver Site C within budget and on schedule for 2024,” the Hydro boss declared in his letter to the commission. “Today, with the measures we have taken over the past several months, the overall health of the Site C project has returned to ‘yellow,’ meaning “some concerns but in control.”

Nevertheless, that first quarter of the year was a bumpy one, especially coming just after the New Democrats decided last December that Site C should be completed.

Energy Minister Michelle Mungall admits to being taken aback on first reading of the progress report. But in a telephone interview she said she was encouraged Hydro was disclosing problems publicly and acting to fix them.

Is she confident the project can be kept on budget? “Yes.” Have Hydro and the contractors gotten the message on safety? “I think so. Safety is not something we compromise.”

Meanwhile, Hydro’s latest employment numbers for Site C claim a total workforce of 2,810, including 2,160 working at the site itself, an overall increase of about 1,000 since the beginning of the year.

It is the New Democrats’ project now and for all the lingering concerns about Site C, they would appear to have authorized full speed ahead on construction.

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